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United States v. Sharaf

United States District Court, District of Columbia

May 2, 2016

UNITED STATES OF AMERICA
v.
HANAN AL SHARAF, Defendant.

MEMORANDUM OPINION

BERYL A. HOWELL Chief Judge.

The government filed a criminal complaint, on March 5, 2015, charging defendant Hanan Al Sharaf, a former Financial Attaché assigned to the Kuwaiti Embassy in Washington, D.C., with conspiracy to money launder, in violation of 18 U.S.C. § 1956(h). See Crim. Compl., ECF No. 1 at 1; id., Aff. in Support of Crim. Compl. and Arrest Warrant (“Shelley Aff.”), ¶ 2. Pending before the Court is the defendant’s motion to dismiss the criminal complaint on the ground of residual diplomatic immunity under the Diplomatic Relations Act of 1978, 22 U.S.C. § 254d. See Def.’s Mot. to Dismiss the Crim. Compl. on the Grounds of Diplomatic Immunity and Memo. of Law in Support (“Def.’s Mem.”), ECF No. 34 at 1. For the reasons explained below, the defendant’s motion to dismiss the criminal complaint is denied.[1]

I. BACKGROUND

The defendant served as the Financial Attaché to the Kuwait Health Office, an office maintained by the Kuwait Health Ministry, in Washington, D.C. from approximately August 10, 2011 until December 9, 2014. Shelley Aff. ¶ 4; Def.’s Mem. at 2. She first entered the United States in July 2011 under an A-2 Non-Immigrant Visa and, again, in January 2014 under an A-1 Non-Immigrant Visa. Shelley Aff. ¶ 4. According to the United States Department of State, A-1 and A-2 visas are only available to those persons “traveling to the United States on behalf of [their] national government[s] to engage solely in official activities for that government.” Def.’s Mem., Ex. 5 (“State Dept’s Visas for Diplomats and Foreign Government Officials”) at 1, ECF No. 34-6.

The Kuwait Health Ministry’s mission in Washington D.C. is to “pay for health care costs incurred by Kuwaiti nationals receiving medical treatment in the United States.” Shelley Aff. ¶ 6. The defendant’s core responsibilities as the Financial Attaché to the Kuwait Health Office was to “review[] claims for payment from medical providers, process[] claims for payment [to medical providers], and personally approv[e] such payments.” Report and Recommendation (“R&R”) at 10, ECF No. 49; Def.’s Resp. Gov’t’s R&R Obj. (“Def.’s R&R Resp.”), ECF No. 53 at 3; Gov’t’s Mot. Opp’n, Ex. D (“Prelim. Hrg. Tr.”) at 23, ECF No. 38-4. To perform her duties, the defendant was a signatory on the Health Ministry’s bank accounts. Shelley Aff. ¶ 23.

On March 5, 2015, the government filed a criminal complaint against the defendant, charging her, under 18 U.S.C. § 1956(h), with conspiracy to “knowingly conduct . . . financial transactions with . . . proceeds of . . . unlawful activities . . . knowing that the transactions were designed . . . to conceal or disguise the nature, the location, the source, the ownership, and the control of the proceeds of specified unlawful activity . . . and that the criminally derived property involved in each transaction as of a value greater than $10, 000.” Shelley Aff. ¶ 2. The government alleges that, first, the defendant conspired to “create shell companies, using names that closely resembled actual health care providers, ” in the States of Virginia and Maryland, and opened bank accounts in the name of these shell companies in U.S. banks in Maryland. Id. ¶¶ 9, 18-20, 24.[2] Second, the defendant conspired to create fake medical invoices for unperformed medical services on behalf of the shell companies. Id. ¶¶ 9, 15. Third, the defendant conspired to pay the fake invoices by wiring funds, or issuing checks, from the Kuwait Health Ministry’s bank account, opened in Washington, D.C., into the U.S. bank accounts controlled by the defendant in the names of the shell companies. Id. ¶¶ 9, 12, 26. Fourth, the defendant and the co-conspirators withdrew in cash the funds deposited by the Kuwait Health Ministry into the shell companies’ U.S. Bank accounts. Id. ¶¶ 9, 15. Lastly, to conceal the embezzlement, the defendant allegedly directed her co-conspirators, who were her subordinates in the Kuwait Health Office, to edit transaction records associated with these unauthorized payments. Id. ¶¶ 9, 15. The defendant also allegedly accepted, in her office at the Kuwait Embassy in Washington, D.C., a bag containing between $5, 000 and $10, 000 in cash from a co-conspirator. See Gov’t’s Mot. Opp’n at 10 (citing Prelim. Hrg. Tr. at 11:3-13:12).

On July 1, 2015, the defendant moved to dismiss the criminal complaint, see Def.’s Mem., which motion was referred to a Magistrate Judge for a Report and Recommendation, See Order Referring Case, ECF No. 47.[3] On September 14, 2015, the Magistrate Judge recommended granting the defendant’s motion and dismissing the criminal complaint, see R&R at 1, to which recommendation the government timely objected, see Gov’t’s Objections to the Magistrate Judge’s Proposed Findings and Recommendations Regarding Defendant’s Motion to Dismiss (“Gov’t’s R&R Obj.”), ECF No. 51. For the reasons set out below, the Report and Recommendation is rejected, and the defendant’s motion is denied.

II. LEGAL STANDARD

A. Federal Rule of Criminal Procedure 59(b)

District court judges “may refer to a magistrate judge for recommendation” dispositive motions, such as a motion to dismiss or quash an indictment or information. Fed. R. Crim. P. 59(b)(1). Parties may file written objections to the magistrate judge’s findings and recommendations “[w]ithin 14 days after being served with a copy of the recommended disposition.” Fed. R. Crim. P. 59(b)(2). The magistrate judge’s recommendation is subject to de novo review by the district court, which may “accept, reject, or modify the recommendation . . . .” Fed. R. Crim. P. 59(b)(3); D.D.C. Local Crim. R. 59.2(c).

B. Federal Rule of Criminal Procedure 12(b)

Pursuant to Federal Rule of Criminal Procedure 12(b), a defendant “may raise by pretrial motion any defense, objection, or request that the court can determine without a trial on the merits, ” including a “motion that the court lacks jurisdiction.” Fed. R. Crim. P. 12(b)(1) & (2). “‘Federal courts are courts of limited jurisdiction, ’ possessing ‘only that power authorized by Constitution and statute.’” Gunn v. Minton, 133 S.Ct. 1059, 1064 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). Indeed, federal courts are “forbidden . . . from acting beyond our authority, ” NetworkIP, LLC v. FCC, 548 F.3d 116, 120 (D.C. Cir. 2008), and, therefore, have “an affirmative obligation ‘to consider whether the constitutional and statutory authority exist for us to hear each dispute, ’” James Madison Ltd. ex rel. Hecht v. Ludwig, 82 F.3d 1085, 1092 (D.C. Cir. 1996) (quoting Herbert v. Nat’l Acad. of Scis., 974 F.2d 192, 196 (D.C. Cir. 1992)). Absent subject matter jurisdiction over a case, the court must dismiss it. Arbaugh v. Y & H Corp., 546 U.S. 500, 506-07 (2006).

“Federal courts have subject-matter jurisdiction over federal criminal prosecutions by virtue of 18 U.S.C. § 3231, which vests the district courts with the power to hear ‘all offenses against the laws of the United States.’” United States v. Yousef, 750 F.3d 254, 259 (2d Cir. 2014). This jurisdiction is limited, however, by the Diplomatic Relations Act of 1978, codified at 22 U.S.C. § 254 et seq., which implements this country’s treaty obligations under the Vienna Convention on Diplomatic Relations (“VCDR”). Specifically, the Diplomatic Relations Act provides that “[a]ny action or proceeding brought against an individual who is entitled to immunity with respect to such action or proceeding under the Vienna Convention on Diplomatic Relations . . . or under any other laws extending diplomatic privileges and immunities shall be dismissed.” 22 U.S.C. § 254d. A particular individual’s immunity “may be established upon motion or suggestion by or on behalf of the individual, or as otherwise permitted by law or applicable rules of procedure.” Id. Under the VCDR, in turn, “a diplomat enjoys immunity from the criminal jurisdiction of the host country, ” subject to certain restrictions. Aidi v. Yaron, 672 F.Supp. 514, 518 (D.D.C. 1987).

When considering a motion to dismiss for lack of jurisdiction, “a court assumes the truth of th[e] factual allegations” contained in the criminal complaint. United States v. Ballestas, 795 F.3d 138, 149 (D.C. Cir. 2015) (citing Boyce Motor Lines v. United States, 342 U.S. 337, 343 n.16 (1952)); United States v. South Fla. Asphalt Co., 329 F.2d 860, 865 (5th Cir. 1964), cert. denied 85 S.Ct. 149 (1964) (“On consideration of a motion to dismiss, all well pleaded facts ...


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